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Essar Stanlow refinery strike threat lifted after Unite secures no compulsory redundancy guarantee
The threat of strike action at Essar Oil’s Stanlow refinery in Ellesmere Port over potential jobs losses has been lifted Unite said today (Tuesday 30 April) after bosses agreed to guarantee no compulsory redundancies to Unite members.
The move came after 97.7 per cent of Unite members voted overwhelmingly for strike action on a turnout of 93.3 per cent in an industrial action ballot.
Unite had been pressing Essar to “guarantee no compulsory redundancies” and commit to continuity of employment for its members after Shell announced a decision to decommission the Shell Higher Olefins Plant (SHOP) and Alcohols units, putting 155 workers at risk .
Commenting Unite regional coordinating officer Mick Chalmers said: “For the last four months Unite has been pressing Essar to guarantee no compulsory redundancies and lift the uncertainty hanging over our members’ heads in the SHOP and Alcohols plants.
“Unite has repeatedly said it is committed to working constructively with the company to redeploy those people who are at risk.
“We are very happy with Essar's decision and hope this is the start of a new positive relationship.”
30th April 2019
Billions to Bust
Lessons from the failure of some of India's biggest business names.
As the sale of Essar Steel under the Insolvency and Bankruptcy Code, or IBC, moves a step closer, its past owner, the Ruia family, is coming to terms with the fact that re-building its business empire to the scale it enjoyed just five years ago might take decades. At its peak, the group, promoted by brothers Shashi Ruia and Ravi Ruia, and at present run by Shashi's son Prashant Ruia, had interests in half-a-dozen sectors - oil refining, power, steel, ports, telecom and BPO, in India and abroad. In 2014/15, it was among the top five business houses in India with revenues of Rs1.6 lakh crore. It had also run up a debt of Rs1.3 lakh crore.
After the IBC process is over, the Ruias would have lost not only their crown jewel, Essar Steel (Rs20,000 crore revenue in the last financial year), but also a number of power and port assets that lenders are referring to the National Companies Law Tribunal or NCLT. They will still own some companies but the group will be less than one-third the size it was five years ago.
The Ruias did everything possible to hold on to Essar Steel. In 2016, they sold their Vadinar oil refinery, a captive power plant and a port for $12.9 billion to pay off some group-level debt. They even tried to bid for Essar Steel when it was offered for sale under the IBC. But the government changed the IBC rules and barred promoters from bidding unless they paid banks the entire money owed by them.
The only consolation is that even after losing Essar Steel, the Ruias would control several companies with combined revenues of over $7 billion, thanks to the Stanlow refinery in the UK.
The Ruias - Rise and Fall
For decades, it seemed the Ruias had been blessed with the nine lives of a cat as they survived one business mishap after another. Brothers Shashi and Ravi had started out as infrastructure contractors in 1969, building ports and pipelines, before getting into the core businesses themselves - steel, telecom, ports, refinery and power. But their problem has been, and still remains, over-dependence on debt. Essar Steel's first loan default, for example, was in 2000. That was not the only one. It had to file for bankruptcy protection for two separate group companies in the US, defaulted on power and refinery loans, among others, and had to seek debt restructuring several times. Each time, they managed to come out of the debt trap by selling smaller assets. Still, by March 2017, the group debt was Rs1.3 lakh crore.
Their other problem has been execution. Both the Vadinar refinery and Essar Steel's plant were delayed several times. The Ruias, when they last met BT, said the reasons were not under their control. Prashant Ruia, for example, said Essar Steel's problems were compounded by the fact that it did not get gas as promised by the government and so could not run at full steam. This, coupled with a global downturn in steel prices and dumping from China, made the business unviable. The Vadinar refinery was delayed due to several reasons, including a hurricane.
However, this time, even after selling several assets, the Ruias have not been able to retain their steel business. Between 2011 and now, they have sold their 33 per cent stake in Vodafone for Rs22,350 crore, BPO unit Aegis for $910 million, and the prized Vadinar refinery. They have sought bankruptcy protection for steel and mining business in Algoma and Minnesota in the US and are close to losing Essar Steel, Essar Projects (renamed as EPC Constructions India), Essar Power Jharkhand and Essar Bulk Terminal Salaya, besides Essar Steel.
After losing all this, the Ruias will have enough businesses - a nine-million-tonne refinery in the UK, a few power plants, ports, and some shipping vessels. The flip side is the enormous debt - the debt in the remaining business is estimated to be Rs30,000 crore.
Business Today 20th September 2018
Ellesmere Port's Stanlow refinery reports robust financial performance
Figures come despite shutdown for largest ever upgrade
Ellesmere Port’s oil refinery has delivered a robust financial performance in the last 12 months according to the latest full year results from owners and operator Essar Oil UK.
Earnings before interest, taxes and other costs were $300m with profit after tax of $161m.
The refinery also saw the completion of its largest ever upgrade costing almost $260m which Essar says ‘will further enhance reliability and profitability’.
With total output affected by the major turnaround Essar says revenues were still up at $5.4bn compared with $4.9bn in the previous year, a rise of more than 10%. Due to the shutdown it processed 7.19m metric tonnes of crude, down from 9.09m in the previous year.
But nonetheless it achieved the basic earnings of $300m for a third consecutive year.
The profit after tax of over $160m, down by just over 4%, was achieved despite Stanlow running for only nine months in the financial year due to the shutdown period involving the upgrade works.
It was operating on a refining margin of $9.4 a barrel up from $8.4 in the previous year, a rise of over 11%, the figures show.
Completion of the ‘ Tiger Cub’ improvement project and Stanlow’s largest ever turnaround will deliver enhanced yields of high value products, reduce crude costs and drive revenue growth Essar believes.
Improvements at the refinery mean it can now handle 75m barrels of crude a year, up from 68m.
Essar has also revealed it has secured ‘many new contracts’ for the direct supply of aviation fuel to airline businesses while the expansion of its award winning UK retail network has seen over 50 filling stations open by the end of March. The first company owned, flagship site will open opposite the Stanlow refinery later this year.
It describes Stanlow as ‘a key national asset’ producing over 16% of the UK’s road transport fuel demand.
Project upgrades during the recent turnaround are expected to lead to financial improvements of between $75m and $80m annually in the prevailing market.
Essar Oil UK chairman Prashant Ruia said: “Stanlow has emerged as a top tier refinery in Europe, with 16% market share in the UK and a growing presence in the retail and aviation sectors. We will continue to make proactive investments in technology to build a sustainable business that remains competitive in the rapidly changing global energy market.”
The company’s chief executive officer S. Thangapandian, commented: “Overall this was ultimately a robust performance following a record breaking first six months of the financial year.
“The major turnaround proved a complex and challenging period and we will ensure all learnings are rigorously understood and implemented for the future.
“The completion of project Tiger Cub was a major positive and is already exceeding our expectations in some respects. Going forward the focus remains on the delivery of further margin booster initiatives to improve yields and increase volumes to grow market share.”
Including the last 12 months Essar has invested over $850m since acquiring Stanlow in July 2011, ‘helping to turn around the business and build a company that is both profitable and sustainable’.
Its board says it has ‘a strategic focus’ to further improve the financial performance of the company through the continued growth and development of the business in the UK and beyond.
A key priority is increasing market share for the direct supply of aviation fuel to leading airlines with agreements now in place with airlines at a number of UK airports. Essar also remains ‘a major player’ in the wholesale supply of jet fuel to UK airports.
It adds safety ‘remains a core value’ with continuous investment in health, safety and the environment to further improve standards and reduce risk. The recent turnaround is said to have been the safest carried out in Stanlow’s history ‘with world class personal safety results’.
Stanlow’s output includes 3bn litres of petrol, 4.4bn litres of diesel and 2.1bn litres of jet fuel a year.
7th July 2018